RBI Governor hints at interest rate cuts

Washington: RBI Governor Raghuram Rajan has hinted at cutting interest rates for a fourth time. He admitted that the continuous slow economic growth has become a central problem world over.

“We’ll look at the data as it comes in and take a further view. We have not said we are finished,” he said in an interview with CNBC television in Jackson Hole, Wyoming, where he’s attending an economic symposium.

After cutting its repo rate by 75 basis points this year, the RBI kept the rate on hold at its last policy review, saying it wanted to monitor inflation and wait for lenders to further lower their lending rates.

The RBI, Rajan said, has reached an agreement with the government on a new monetary policy committee that largely meets the goal of transitioning from a system where the governor alone is responsible for decisions in order to insulate it from outside pressure, he said.

The agreement on the new rate setting panel was different from a proposal circulated in July that would allow the government to appoint the majority of members.

“There’s an agreement with the government, which is not that plan,” Rajan said. He didn’t give more details.

The committee would replace the current rate-setting system once the RBI Act of 1934 is amended in parliament.

Having a committee would make it easier for individuals to resist pressure and ensure that “monetary policy doesn’t change overnight” if one person drops out, Rajan said.

“We also need a transition path from where we are now to that committee,” he said. “It can’t be that overnight the committee takes over and nobody understands what the views of the committee are.”

Rajan said that he sees a “mood of optimism” in India’s economy and that the nation is relatively insulated from a slowdown in China.

He called for lawmakers to overcome their differences to implement a goods and services tax, which he said, would be “one of the most important changes in India”.

He also said a proposed bankruptcy code would also be “extremely important“.

“If we can get a good bankruptcy code, we can start issuing long-term bonds, which is absolutely necessary to finance infrastructure, finance all the big things the government plans,” Rajan said.

He also cautioned the US federal reserve on going ahead with a rate hike, especially at a time when world economic growth is stalling which has led to massive volatility in currency, equity and commodity markets.

“My position over time has been don’t do it when the world is in turmoil,” Rajan told CNBC. “It’s a long anticipated event, it has to happen sometime…everybody knows it has to happen..but pick your time.”

Earlier on Friday Federal Reserve Vice Chairman Stanley Fischer told CNBC that it was too early to tell whether volatility in the market made it more or less compelling to raise rates at the central bank’s mid-September policy meeting.

Supervised by young engineers, workers at the start-up company Chakr Innovation in New Delhi cut and weld sheets of metal to make devices that will capture black plumes of smoke from diesel generators and convert it into ink.

Supervised by young engineers, workers at the start-up company Chakr Innovation in New Delhi cut and weld sheets of metal to make devices that will capture black plumes of smoke from diesel generators and convert it into ink.

In a cabin, young engineers pore over drawings and hunch over computers as they explore more applications of the technology that they hope will aid progress in cleaning up the Indian capital’s toxic air – among the world’s dirtiest.

While the millions of cars that ply Delhi’s streets are usually blamed for the city’s deadly air pollution, another big culprit is the massive diesel generators used by industries and buildings to light up homes and offices during outages when power from the grid switches off – a frequent occurrence in summer. Installed in backyards and basements, they stay away from the public eye.

“Although vehicular emissions are the show stoppers, they are the ones which get the media attention, the silent polluters are the diesel generators,” says Arpit Dhupar, one of the three engineers who co-founded the start up.

The idea that this polluting smoke needs attention struck Dhupar three years ago as he sipped a glass of sugarcane juice at a roadside vendor and saw a wall blackened with the fumes of a diesel generator he was using.

It jolted him into joining with two others who co-founded the start-up to find a solution. Dhupar had experienced first hand the deadly impact of this pollution as he developed respiratory problems growing up in Delhi.

An Indian girls holds a banner during a protest against air pollution in New Delhi, India, Nov. 6, 2016.

A new business

As the city’s dirty air becomes a serious health hazard for many citizens, it has turned into both a calling and a business opportunity for entrepreneurs looking at ways to improve air quality.

According to estimates, vehicles contribute 22 percent of the deadly PM 2.5 emissions in Delhi, while the share of diesel generators is about 15 percent. These emissions settle deep into the lungs, causing a host of respiratory problems.

After over two years of research and development, Chakr has begun selling devices to tap the diesel exhaust. They have been installed in 50 places, include public sector and private companies.

The technology involves cooling the exhaust in a “heat exchanger” where the tiny soot particles come together. These are then funneled into another chamber that captures 70 to 90 percent of the particulate matter. The carbon is isolated and converted into ink.

Among their first clients was one of the city’s top law firms, Jyoti Sagar Associates, which is housed in a building in Delhi’s business hub Gurgaon.

Making a contribution to minimizing the carbon footprint is a subject that is close to Sagar’s heart – his 32-year-old daughter has long suffered from the harmful effects of Delhi’s toxic air.

“This appealed to us straightaway, the technology is very impactful but is beautifully simple,” says Sagar. Since it could be retrofitted, it did not disrupt the day-to-day activities at the buzzing office. “Let’s be responsible. Let’s at least not leave behind a larger footprint of carbon. And if we can afford to control it, why not, it’s good for all,” he says.

At Chakr Innovation, cups, diaries and paper bags printed with the ink made from the exhaust serve as constant reminders of the amount of carbon emissions that would have escaped into the atmosphere.

There has been a lot of focus on improving Delhi’s air by reducing vehicular pollution and making more stringent norms for manufacturers, but the same has not happened for diesel generators. Although there are efforts to penalize businesses that dirty the atmosphere, this often prompts them to find ways to get around the norms.

Tushar Mathur who joined the start up after working for ten years in the corporate sector feels converting smoke into ink is a viable solution. “Here is a technology which is completely sustainable, a win-win between businesses and environment,” says Mathur. (VOA)